Elon Musk reaches deal over tweets about taking Tesla private

Media playback is unsupported on your device                  Media captionTesla's Elon Musk'mislead investors SEC alleges

United States carmaker Tesla has agreed to pay a $US40 million ($A55.37m) fine and have founder Elon Musk step down as chairman for misleading tweets about stock prices.

In the tweets to his 22 million followers, he suggested he would take Tesla private at $420 per share - a substantial premium to its trading price at the time.

Musk had stunned global financial markets on August 7 when he issued tweets saying he had the "funding secured" to take his automaker private.

Musk has not tweeted about the SEC settlement. The complaint alleges that Tesla notified investors that Musk's Twitter account would be used as a "means of announcing material information about Tesla", but the company failed to have "disclosure controls or procedures in place to determine whether Musk's tweets contained information required to be disclosed in Tesla's SEC filings".

In addition, Tesla must replace Musk with an independent chairman; Musk can't be considered as chairman for at least three years.

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Tesla will also name two new independent board directors as well as paying the fine.

Both he and Tesla will also have to pay a $20m (£15m) fine.

"In truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies", wrote the SEC, which had filed fraud charges earlier this week.

The SEC said those claims were "false and misleading".

'The resolution is meant to prevent further market disruption and harm to Tesla's shareholders'. After that period, Musk could presumably be re-elected as Tesla chairman.

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